Ask Question
14 January, 04:17

Gabriele Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for $952. At this price, the bonds yield 6.1 percent. What must the coupon rate be on the bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

+2
Answers (1)
  1. 14 January, 05:55
    0
    =5.32% (Approx)

    Explanation:

    Current price=Annual coupon*Present value of annuity factor (6.1%,8) + $1000*Present value of discounting factor (6.1%,8)

    952=Annual coupon*6.18529143+1000*0.622697222

    Annual coupon = (952-622.697222) / 6.18529143

    =$53.24 (Approx).

    Coupon rate=Annual coupon/Face value

    =$53.24/1000

    =5.32% (Approx)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Gabriele Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers